NEW YORK — Shoes remain a standout category at The Jones Group Inc.
But as the economy continues to be plagued with sluggish employment numbers, political uncertainty and a highly promotional environment, the firm will stick to planning its business conservatively, said CEO Wesley Card.
Jones’ president and CEO of branded businesses, Richard Dickson, told Footwear News, “Footwear is trending well for us … both domestically with our wholesale customers … and with our international partners who were here this week and [had] a great reception to our new product lines. There’s exuberance around the work we’ve been doing around Nine West, and we’re also seeing some great strides with Stuart Weitzman as he continues to expand around the world.”
In a conference call with analysts, Card said, “[In] Western Europe, we’ve seen recovering results in the London base luxury businesses. … [The rest of the region] is consistent with what you’re hearing from others. It’s generally weaker. Although, we are launching Nine West into Germany and have had some good success in that market. It’s a tale of two worlds.”
He added, “There is no question the consumer is still driven by value and ‘buy now, wear now’ promotions, and we see that consistently. It is affecting most categories, [although] the higher end is probably somewhat less susceptible.”
For the third quarter ended Sept. 29, Jones’ net income dropped 57.6 percent to $17.4 million, or 22 cents a share, from $41 million, or 49 cents, a year ago. Excluding one-time charges and balances related to foreign currency fluctuations, adjusted profit was 57 cents versus 48 cents last year.
Revenues were flat at about $1.04 billion.
The newly acquired Brian Atwood business contributed about $2 million to the quarter’s top line, the company said, while Stuart Weitzman sales grew 8 percent year over year. Rachel Roy footwear was up in the double digits.
Dickson noted that Kurt Geiger “is holding its own in the face of continuing softness in the European market,” registering double-digit improvements in retail store growth and e-commerce sales. He also expects to announce a New York location for Kurt Geiger in the next six weeks.
Card added that sales of boots and seasonal items have picked up recently as the weather has started to cool somewhat.
“Our approach to planning in the current economic and political environment is … to play conservatively as we proceed through 2012 and into 2013,” the CEO said. “We are very focused on product enhancement and innovation so that our products are modern and relevant [and we’ll] continue to accelerate the pace of change. We are optimistic that consumer response to our assortments will continue to improve over prior periods, and we will see the beginnings of significantly improved retail productivity.”
Analyst Diana Katz of Lazard Capital Markets said she wants to see the firm’s revenue turn positive in the next quarter. “They’re finally there on the top line for the most part, but it was still disappointing to hear retail will still not be getting to breakeven,” she said.
Jones ended the period with a cash balance of $234.1 million, up significantly from $61.2 million a year ago. Long-term debt increased to $958.1 million, from $857 million.